Manufacturing & The Economy

After a difficult first quarter 2014, with U.S. GDP dropping to 2.9% (due in part to weather), optimism among industrial manufacturers decreased six points to a still largely positive 65%. Optimism about the global economy’s prospects declined 3 points to 38%. Panelists from PwC’s quarterly Manufacturing Barometer remain optimistic about the U.S. economy but are mostly uncertain (57%) about the world economy.

Own company 12-month revenue targets remained moderately high at 5.2% average rate of growth, on pace with the prior quarter (5.3%), but above a year ago (4.6%). International sales retained their momentum, with 32% prospective revenue contribution among those selling abroad.

A strong rebound in longer-term CAPEX spending plans was reported – up 13 points to 52%, and with a sustained level of investment, 5.7% of sales. Shorter-term operational spending remained high, with 75% planning increased spending – led by R&D, new product or service introductions and IT, and a rise in business acquisitions. Planned M&A activity was up eight points to 38%, with most planning purchase of another business (35%).